Vets' home loan defaults lowest since 1980

Nov. 14, 2013 - 10:15AM
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The default rate on veterans’ home loans has dropped to its lowest level since 1980 while nationwide foreclosure rates on veterans’ loans have fallen to their lowest level since 2008.

The Mortgage Bankers Association reported Nov. 7 that the delinquency rate — defined as loans at least one payment past due — dropped to 6.41 percent of all outstanding loans in the first quarter of 2013.

The foreclosure rate fell to 3.08 percent, according to the association’s national delinquency survey.

What stands out in the survey are veterans’ home loan, which in the first quarter had a 5.41 percent delinquency rate and a 1.81 percent foreclosure rate.

The chief reason for the low default and foreclosure rates is that 40 percent of the Veterans Affairs Department’s loan portfolio originated since 2007, generally considered the end of the bursting of the “housing bubble,” according to the association.

VA credits an aggressive effort to work with financially troubled homeowners as soon as they miss their first payment as part of the reason for the low foreclosure rates

There are still foreclosure problems, but only two states — New York and New Jersey — showed an increase in the percentage of loans in foreclosure in the last quarter, according the association.